UBL FUND MANAGEMENT LIMITED vs Ms — 2025 CLD 393 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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UBL FUND MANAGEMENT LIMITED VS Ms. MOMY KAMAL Reglns. 66a(c)(i), 66a(c) (iv), 66a(d) & 66a (f)---Investing in Equity/Mutual Funds---Mis-selling / concealed investment risks, allegation of---Risk categorization of Investor---account Opening Form (aOF)---Object and purpose---appellant (Fund Management Company) was penalized by the Securities and Exchange Commission of Pakistan (Commission) on complaint of lady investor (a housewife who had invested an inherited amount) who redeemed the availed plan owing to loss of principal investment allegedly due to contraventions on the part of the appellant---Stance of the appellant was that at the time when respondent / complainant made the Investment there was no specific law requiring it to consider specific risk categorization and the same were later introduced vide Circular No. 2 of 2020---Validity---Though appellate Bench endorsed said stance, however, this was not the case against the appellant that it failed to follow any specific risk categorization---The case against the appellant was that it failed to accurately categorize the risk tolerance level of respondent / complainant as per the given data and information---appellant had failed to understand the object of account Opening Form (aOF) and admitted the major part of respondent's investment was in equity fund---account Opening Form (aOF) was not a mere formality rather it was a key document to determine the investment tolerance level of respondent, however, the appellant's relationship manager/sales staff committed serious irregularities in said regard---The sanctity of the aOF cannot be undermined and the appellant also has no mechanism to check and verify the accuracy and suitability of data provided by the relationship manager/sales staff to avoid incidents of incorrect risk categorizations---Respondent / complainant is a housewife, therefore, she cannot be considered well-informed and vigilant investor who can understand the risk-bearing factors of equity funds ; thus, the appellant had not acted in her best interest and failed to ensure reasonable care regarding the suitability of the investment product offered to complainant---However, appellant had apprised the appellate Bench that without admitting the guilt and on compassionate grounds, a compromised deed had been executed between the parties with the amount of loss suffered by respondent having been paid to her---appellate Bench, while appreciating said compassionate act of compensation, converted the penalty into a warning---appeal, was dispose of accordingly.

UBL FUND MANAGEMENT LIMITED vs Ms — 2025 CLD 393 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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